In the latest issue of the Australian Education Union journal, research officer John Graham (who I knew quite well from NSW politics, funnily enough)Â has decided that itâ€™s better to play the man than the ball. After discussing two of my recent papers on education – though not, curiously, a third paperÂ in which I show that higher starting salaries buy smarterÂ teachers – he concludes that I must be a mere shill for the Education Minister, and opines:

The research backing for her proposals is transparently thin â€“ an ANU economist.

When people who represent special interests start frothing at the mouth, whether they be union hacks or business stooges, you know you must be doing something right!!!

Having said that, as I have indicated previously, I am still not convinced that performance pay schemes are the best solution. Perormance pay seems to be aimed at one of two potentialk problems. Either teachers are putting in low effort at present and you want to increase the amount of effort or you are trying to construct a separating equilibrium to differentiate between high ability teachers and low ability teachers. Neither of these seem likely to be major issues to me. The remaining possibility, which seems much more likely to be the main problem in my view, is that at prevailing wages it is difficult to attract enough qualified teachers. The apparent shortage of qualified teachers in some subjects suggests that this is at least part of the story. It seems to me that if you want to correct this problkem, you need to offer higher wages for teachers. While merit pay will certainly raise the average wage paid to teachers, it also incurs costs in terms of designing and implementing an appropriate measure of performance. In addition to these administration costs, it may well induce low morale among teachers. If the adverse selection or moral hazard problems are not particularly severe, an across the board par rise for teachers might be a better approach. Of course, this would mean increased taxes or school fees. People will need to decide how much they value teachers at the margin.

Andrew – you and Noel Pearson are suffering from the same disease. You’re clearly people who should be progressive, but you have somehow come to opinions that the current government finds it can agree with. 🙂